Archive for May, 2007

Financial Secretary Dr. Carla Barnett has resigned her post in the Ministry of Finance. Lately, it emerged that this job has been offered to Joe Waight, financial advisor, who served as Financial Secretary during the 1st term of the Musa administration. Waight he has told Government that he would accept this proposal.

Waight has worked in the Ministry of Finance since 1982, and therefore is particularly well qualified in the issues of Government finances.

It seems that Waight is ready to accept the new job despite the fact that the the spending of public funds has caused the resurgence of the debate. This could precipitate the early departure of Dr. Barnett several months before her contract would expire.

It should be noted that her sudden departure happened at the peak of the controversy over the settlement of $33 million for Universal Health Services (UHS). Before becoming Financial Secretary, Dr. Barnett was chief executive officer in the Ministry of National Development, Deputy Secretary General of the Caribbean Community (CARICOM), and Deputy Governor of the Central Bank.

Recently, there was a series of scandals with the Government and revelations by the media that there had been material non-disclosures to Government officials, including Dr. Barnett, regarding Governmentâ€™s financial commitments. As Dr. Barnett was respected in both the local and international financial community, her sudden departure is a concern to international financial institutions that had trusted her professionalism.

The ending of the Governmentâ€™s brokerage of the sale of BTK was scheduled 2 years ago. However, the costs turned into the complex strings of transactions, which still are shrouded in court battles and continue to grow.

In the report in March 2005, when a tally of the numbers was last made, the focus was made on the costs incurred by the Government and the benefits accrued to Michael Ashcroft who now ultimately controls BTL. That report puts the tally at $23.3 million. However, only after that the court wrangling came to an end and the Government sold a large chunk of shares to Sunshine Holdings, an Ashcroft-related company.

As to the most recent figures, the tally was $77 million, which includes the following:
– $5.4-million-worth shares credited to Jeffrey Prosserâ€™s Innovative Communication Corporation by the Government;
– the $10 million â€œpremiumâ€ Michael Ashcroft got by means of selling off his majority interest to the Government in 2004;
– $4 million in costs Government incurred by re-profiling the debt with the $50 million loan from the International Bank of Miami taken to facilitate the sale of the BTL shares;
– interest costs of about $1 million for the above-mentioned loan;
– $6.6 million for re-profiling other debt related to the sale.

The Government of Belize also has to repay to BTL $6 millionwith tax credits, as the intended merger between BTL and the defunct Intelco failed, and $20 million in public funds loaned to Sunshine so that it buys the BTL shares back from the Government, and a $17 million write-off for the Belize Bank related to the same share transfers.

All the above-mentioned sums lead to approximatelt $77 million as of 2007.

A press release issued by Belize Natural Energy (BNE) confirmed that it had offered to buy back Government’s 10% oil equity. By BNE information, the offer was initiated by the Government of Belize, while the Government reports that the offer was prompted by BNE.

The full terms of the Belizean Government/BNE arrangement are not worked out, and one of the main undecided questions is of just what Government has 10% equity in â€“ all fields explored by BNE, or only Spanish Lookout.

The Government sources stated that the Government is holding 10% stake only in the commercially producing Spanish Lookout oil fields, and is not liable for BNE’s explorations elsewhere; however, in its press release BNE did not mention the Spanish Lookout field, but said that the 10% equity that belongs to the Government of Belize, covers almost 600,000 acres.

The Government points to the Production Sharing Agreement with BNE in 2003. Government officials have explained that because Government has 10% equity in the Spanish Lookout field only, it should pay for 10% of the costs and share in 10% of the revenues that are associated with this field. If BNE is arguing that Goverment’s equity covers also non-producing fields, the end result would be less overall returns of the Government.

It was also recently reported that the Goverment investment’s cost was somewhere about $3 million, while BNE offered to get back that 10% for $33 million. That figure was proposed by BNE, using projections of revenues Government would have received over a 10 to 15 year projection. Government has some doubts about the accuracy of these figures, and is going to audit them.

We have discussed the fact that the Association of Concerned Belizeans filed the action in the Supreme Court of Belize, to make the Prime Minister to declare the Universal guarantee illegal. ACB’s arguments were that under section 44 of the Constitution, the Prime Minister was not authorized to sign such a loan document without the knowledge of Cabinet. So, without the approval of the House of Representatives the guarantee becomes invalid.

The position of the Prime Minister remains unstable, due to the debates organized by opposition and public organizations; so is also $33 million owing to the Belize Bank, which is actually large part of the Belize Bank’s portfolio. As a result, the Bank is taking some actions not to lose it. Last week, Bank’s Chairman Philip Johnson sent a letter threatening the Association of Concerned Belizeans.

In the letter, the Chairman said that â€œthe bank does not accept that you are entitled to…intervene in a freely negotiated contractual arrangement and would strongly discourage you from doing so.” He also warned the organisation: “in the event that you do decide to commence legal proceedingsâ€¦the bank will…pursue the ACB and its individual members directly for all…loss which it suffers.” In this letter, the ACB is also characterized as flimsy and superficial.

There is information that a similar letter of caution was sent to the Belizean Chamber of Commerce, asking the organization not to join the ACB actions; and the fact is that the Chamber did not join the ACB. It was however joined by the National Trade Union Congress of Belize, which includes already mentioned Senator Godwin Hulse.

Additionally, UDP has confirmed opposition’s opinion about the UHS guarantee by making a repeated statement demanding for the Prime Minister to resign. The UDP said that Monday’s PUP Parliamentary Caucus failed to support the guarantee, as signed by the Prime Minister in December 2004.